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Thursday, October 31, 2013

Spooky! Cisco Raises Catalyst Switch Prices By Almost 70%

In the spirit of Halloween, let’s talk about the most recent Cisco experiment. While it has nothing to do with a boiling cauldron over the fire or rejuvenating Frankenstein, it is an interesting one none-the-less. A recent article form Network World claims that they have Cisco documentation stating that they plan to raise the price of some Catalyst switch models by as much as 67%.

Cisco’s planned price increase will not affect newer generation Cisco Catalyst switches. Cisco switches that will be affected by the pricing increases include select Catalyst 3000, 4000, and 6000 series switches, as well as their associated accessories and other related products.

The favored theory behind Cisco’s pricing experiment is that it is a strategic move intended to push Cisco users into buying newer generation product. This is the opposite of the traditional approach, where manufacturers lower the price of previous generation product when releasing a new generation.

Not only does Cisco’s price increase go against the grain as a strategy for a new generation product release, but it is also against the current market trend. Volume and value engineering have lead to a combination of silicon density and chipset consolidation that has resulted in lower networking switch hardware costs across the board.

While some say this may be the start of a new trend for other manufacturers in order to increase their profits, others say this move may drive Cisco users to turn to the secondary or refurbished Cisco market or even, to turn to a competing network manufacturer like Juniper Networks. Taking place as soon as November 2nd, time will tell if Cisco’s experiment turns out to be a trick or a treat for the networking giant.